Treasurer Hockey sets scene for budget pain, but not all this year

Joe Hockey told AM that the budget will focus on the next 10 years, not just the next 12 months.

News Online Brisbane

The Federal Treasurer Joe Hockey has set the scene for a budget of shared pain, as the Government looks to address what it calls Australia's spending problem.

The findings of the Commission of Audit have been a closely guarded secret, but the Government is slowly beginning to reveal its work.

Joe Hockey will release the full report next week. He says the Government will reject some recommendations outright, and will take time to respond to others, ultimately giving voters a say on many big proposed changes.

"We are honouring our commitments and, in relation to many of the structural changes that we have to make, the Australian people have the opportunity to make decisions at the next election," he said.

However, the Treasurer is using the Audit Commission's analysis of the biggest pressure points on the budget to prepare the public for what is to come, whether now or several years hence.

"I don't think anyone fully appreciated that the Medicare system was going to grow at twice the speed of the economy over the next 10 years; the hospital system was going to grow at three times the speed, more than three times the speed of the economy; or that school funding in the outer years was going to grow at three times the speed of the economy," he argued.

'Framing a 10-year budget'

On AM this morning, Joe Hockey was keen to emphasise the long-term nature of the Government's task.

"We're framing not just a one-year budget but a 10-year budget, and decisions we're making are having very significant impacts out to 2050," he told AM's presenter Chris Uhlmann.

Some areas are off limits. The Government is being constantly reminded of the promise the Prime Minister made the night before the election in September of no cuts to health, education, the ABC or SBS, and no change to pensions or the GST.

The Treasurer has also ruled out changes to superannuation tax concessions, at least in the short-term.

"We said we're not going to have any adverse decisions in relation to superannuation in our first term but clearly, as we have the proper debate about the aging of the population, we need to look at the role of superannuation and the preservation age," Mr Hockey added.

So any changes would be taken to the next election. The now widely expected increase to the pension age to 70 is in that category too, given the already scheduled increase to 67 is not due until 2023.

"There is an inevitability that at some point we have to increase the age pension age, but it is well into the future," Mr Hockey said.

What also seems inevitable, and much more likely to give a short-term boost to the budget, is a greater use of means testing and co-payments in areas like health spending.

"We all have to make a contribution because nothing is for free. Nothing can remain for free, and the fact is we have to ensure that the system works for those most vulnerable, the poorest in our community," the Treasurer argued.

Labor, Greens support unlikely

Joe Hockey has appealed for bipartisanship, but that seems unlikely.

"We'll wait 'til we see it but, at the moment, we've got opposite arguments that collide on budget night," said the Opposition's finance spokesman Tony Burke.

"The arguments from Tony Abbott, where he claimed he would be a Prime Minister who would keep his promises, and the arguments that Joe Hockey is now making about what's likely to be in the budget."

Mr Burke says the statements about measures to reduce the budget deficit appear to contradict the Government's pre-election commitments.

"Everywhere you look it's a broken promise. They said NDIS (National Disability Insurance Scheme) they were the same as us, they'd said Gonski they were the same as us, and they'd said there were no cuts to all those areas - health, education, the ABC, no changes to pensions," he argued.

"Every word that comes out of their mouth says now that all of that is back on the table."

The Greens say the Parliamentary Budget Office has advised them that $13 billion could be saved over four years by cutting one of the most expensive forms of industry assistance - the diesel fuel rebate.

The Greens acting leader Adam Bandt says it is one of many alternatives the Government should consider.

"If there's not enough money in the budget to fund the services that Australians expect, let's ask the likes of Gina Rinehart to pay a little bit more rather than coming after those who can least afford it," he argued.

On AM, Joe Hockey would not be drawn on that particular measure, but also did not rule it out.